Sura 9 Verse 29:9.29: Fight those who do not believe in Allah, nor in the latter day, nor do they prohibit what Allah and His Apostle have prohibited, nor follow the religion of truth, out of those who have been given the Book, until they pay the tax in acknowledgment of superiority and they are in a state of subjection.
And again:
9.73: O Prophet! strive hard [make war] against the unbelievers and the hypocrites and be unyielding to them; and their abode is hell, and evil is the destination.
Qutb says of this that this refers to "non-Muslims who wage war against Islam", but this is a fanciful reading and refuted by what happened in the early history of Islamic expansion. In fact Abu Bakr, the first Caliph, is quite explicit on this. He is reported as saying in the Hadith: "I have been ordered to fight the people until they profess that there is no god but God and that Mohammad is the messenger of God" (Peters, p. 127). Once again the apologetic defence that "people" here means the pagan Arabs attacking the Muslims is without foundation. By Abu Bakr's time Islam was no longer on the defensive and the pagan Arabs had all converted either voluntarily or by fear.
The only exception to this was for Jews and Christians (called the dhimmis) who have to pay a special tax (the Jizya) "with willing submission and feel themselves subdued". This qualification is important for even in Arabia during Muhammad's rule the fate of the defeated dhimmis was inevitably death, enslavement or exile. A notorious incident was how Muhammad dealt with the Jewish tribe of Banu Qurayza where all the 700 men of the defeated tribe were slaughtered in one day in 627 CE and the women and children enslaved with the wife of the Chief recruited into Muhammad's harem. A similar slaughter took place two years later after the Jews lost the Battle of Khaybar.
(source: http://www.uq.net.au/slsoc/manussa/tr05manu.htm#ch3a)
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