The verse cited in this respect is in the second chapter of the Quran, the two hundred and fifty-sixth verse:

{There is no compulsion in religion. The Right Way stands clearly distinguished from the wrong. Hence he who rejects the evil ones and believe in Allah has indeed taken hold of the firm, unbreakable handle. And Allah (Whom he has held for support) is All-Hearing, Al—Knowing.} (Al-Baqara 2:256)

When it says “there is no compulsion in religion”, it is stated in an absolute manner. And the verse continues to say: {The Right Way stands clearly distinguished from the wrong}, which implies that guidance has been made plain and distinct from the error.

God has made His message plain, the truth and error are now distinct and there is no need to compel anyone to be this or that (religion). In fact, it would be wrong to compel anyone.

If you compel somebody to be a Muslim then they wouldn’t really be a Muslim, because to be a Muslim means that you have to be a Muslim at heart.

The classical Muslim scholars said that it involves the affirmation by the tongue and also the conviction of the mind; the two things have to come together.

So you can only force a person to confess verbally and say: “Yes, I am Muslim; yes I declare the testimony of faith of Islam." But then, in their mind, there belief could be something contrary to that.

Since that is what is required, then how can you compel somebody to be a Muslim? It is really impossible; you will be just fooling yourself if you think you can compel someone to be a Muslim.

Q: What about internally within the faith, for example somebody who is already a Muslim; does this verse also apply to them?

A: Yes, because the verse is taken in an absolute manner; however, we should know that those scholars in the past who have said that you can, in a way, compel the Muslim who is already a Muslim, to remain as a Muslim; meaning that if they apostated from the religion then the penalty is death.

They acknowledge that this means they are compelling them to stay in the faith; they said, well this verse no longer applies.

Which means that they are subscribing to a belief that there are certain verses in the Quran which were once given and whose rulings applied at the time, but though the verses remain in the Quran, their rulings no longer apply.

Often they will say that there are some other verses in the Quran that abrogates this one, and gives a new ruling such that this one is repealed, or that some saying or practice of the Prophet Muhammad (peace be upon him) shows that this verse no longer applies because the Prophet (peace be upon him) himself was not following this verse, at least in his later life.

But that doctrine of abrogation, to understand that some verses in our existing text of the Quran, somehow should be ignored, and that its legal ruling should not be put into effect, is disputed by many scholars in our present times, because when we look back in the history of this idea, you see that the authentic sayings of the Prophet (peace be upon him) cannot be brought to show that such a doctrine is valid, and the words of the Quran themselves show that the Quran should have lasting applicability; these are the words of God and they cannot be simply pushed away by any sort of imagination of anyone. 

Somebody imagines that this verse is abrogated or this other verse is abrogated, and what authority do they imagine to make these pronouncements?

So since there is no authentic pronouncement from the Prophet (peace be upon him) himself to validate this doctrine, and the Quranic text itself seems to be very general and absolute, that is what should hold the day.

And this verse in particular says in a very broad manner “la ikraha fiddin”, "there is no compulsion in religion", and so it should apply across the board.

http://www.onislam.net/english/ask-about-islam/ethics-and-values/human-rights/461472-what-is-the-meaning-of-there-is-no-compulsion-in-religion.html