This verse was revealed during a time of conflict between the early Muslim state in Madinah and certain Byzantine-aligned groups. It is not a general command to fight all Jews or Christians everywhere and at all times. It addressed political and military confrontation, not personal belief .People of the Book” Refers mainly to Jews and Christians living under or opposing the Islamic state at that time. Islam recognizes them as recipients of earlier revelation. These are enemies who were fighting against islamic state . But now they have lost so they have to be disarmed so that they can no longer pose any threat to country and cause chaos . It's a peace restoration process. And if the do not comply with the request then obviously they will be faught as it is said in the surah .jizyah A tax paid by non-Muslim citizens of an Islamic state In return, they: Were protected by the state extra sequrity from forgien attacks . It's like having a personal bodyguard. Were exempt from military service so no tension in the times of war they don't have to die in war . Muslims soldier will take care of it and they can chill in there homes . Could practice their religion freely there is separate department for non muslim where they have direct contact with the main caliphate where they can share there problems and it will be addressed by the Amir himself. Being a non muslim in a islamic state is such a privilege . But being a Muslim is a great responsibility too . And jiziyah is just 1.5-2% of income . It isn't that bad comon bro people pay 20-30% tax in mordern age . And muslim pay zakat it's a same thing but different name . They both spend .

Muslims instead paid zakat and served in defense.