Kafir literally means a ‘denier.’ This term was only used for certain contemporaries of the Prophet. The word kafir has never been used in the Quran to mean either a non-Muslim or an infidel as a whole. In fact, this term was applied solely to contemporaries of the Prophet. Kafir (pl. kuffar) was used to refer to those people who had completely understood the true message of Islam and refused to believe in it due to stubbornness. The Prophet peacefully conveyed to them the divine message over a long period of time, but they refused to follow the truth of his words. God, therefore, declared those people, the contemporaries of the Prophet as kuffar that is, the deniers. The use of the word kafir for anyone other than the contemporaries of the Prophet is not permissible. The most important point to be grasped on this subject is that the word kafir denotes an individual rather than a certain race or community. It is in no way a group appellation. However, the generally held view is that one who is not a Muslim is kafir. This is an entirely baseless supposition. The word kafir is not synonymous with non-Muslim or a non-Muslim community. Being a kafir is a matter of the heart, which God alone knows and therefore no person has any right to accuse a fellow human as being kafir. Kafir was a term of reference, restricted in place and time, and which is no longer relevant today. Now all are equally human beings and they have to be dealt with as human beings.

Source: The Seeker’s Guide