When a non-Muslim says "peace be upon you" greeting you, how do we respond?

The scholars have agreed on the obligation to return the greeting to the People of the Book by saying: "Wa 'alaykum" (and upon you) or "'Alaykum" (upon you) only, without "Wa 'alaykum as-salam" (and upon you be peace). The prophetic hadiths were narrated with both wordings, with the inclusion of the waw and its omission, and most narrations include it, as the waw may imply participation in death, or a fresh start indicating that they deserve their blameworthy fate. The correct view is that it is permissible to include the waw or omit it, and including it is better and more sound. As for initiating the greeting of peace with disbelievers, the consensus among scholars is that it is prohibited, based on the saying of the Prophet (peace and blessings be upon him): "Do not initiate the greeting of peace with the Jews or the Christians." However, it is permissible to initiate the greeting of peace with a group that includes both Muslims and disbelievers, with the intention of greeting the Muslims.