From Tafseer ibn Katheer:
{وَإِذَا حُيِّيتُمْ بِتَحِيَّةٍ فَحَيُّوا بِأَحْسَنَ مِنْهَا أَوْ رُدُّوهَا** أَيْ: إِذَا سَلَّمَ عَلَيْكُمُ الْمُسْلِمُ، فَرَدُّوا عَلَيْهِ أَفْضَلَ مِمَّا سَلَّمَ، أَوْ رَدُّوا عَلَيْهِ بِمِثْلِ مَا سَلَّمَ [بِهِ] (6) فَالزِّيَادَةُ مَنْدُوبَةٌ، وَالْمُمَاثَلَةُ مَفْرُوضَةٌ
"And when you are greeted with a greeting, then respond with better than it or return it." Meaning, when a Muslim gives Salaam to you, then return it with a greeting better than the one he had given, or return it with the same greeting he had given. Increasing upon the greeting (i.e. greeting better than you had been greeted) is
Mandoob (recommended), but returning the greeting is
Mafroodh (obligatory)." [Tafseer ibn Katheer.]